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But how do you know you have a great product before you ship? Until you have paying customers, you don't have a real feedback loop.

If you need customer feedback in order for you to know what to build, what business do you have building anything? How could you ever hope to innovate?

You can't be sure that you are going to sell a good product, but you definitively know when you are going to ship a bad product. And a lot of "startups" are just selling bad products.

Startups can "ship" many times before anyone notices. Big companies (like Apple) can do private user testing.

You will know when your product is great because users will have an unmistakable reaction. It's the difference between "oh, that sounds interesting" and "shut up and take my money!"